Victoria’s Secret has been a household name in American retail since the late 1970s, a staple of shopping malls and, as of earlier this year (per Forbes), the top lingerie label in the U.S. It’s also associated with the popular annual Victoria’s Secret Fashion Show.
However, the brand and its parent company L Brands have been struggling in recent years, and now one analyst believes the company could be in huge trouble.
Per CNN, Citigroup analyst Paul Lejuez has slashed his rating of L Brands from a “buy” to a “neutral” rating and reduced his price target for the company from $35 a share to $27. The company’s share price closed at $26.71 on Monday, per Yahoo Finance.
Lejuez’s note adds that the Victoria’s Secret brand has been “slow to implement meaningful change” with “cultural norms shifting away” from what Victoria’s Secret has to offer. The analyst adds the company will need to be more inclusive, but it will have what he describes as “a tough balancing act to attract new customers without alienating its existing customer base.”
Back in March, activist investor Barrington Capital Group wrote a letter to L Brands’ founder, criticizing the company for several years of missteps in the branding of Victoria’s Secret. This included stating that the brand “was slow to adjust to the shift in market demand from padded and push-up bras toward bralettes and sports bras,” and also that the company has failed to capitalize on the popularity of activewear and athleisure.
The company announced back in February, per USA Today, that it was closing 53 Victoria’s Secret stores. It had closed over 30 stores last year but still operates more than 1,000.
— CBS News (@CBSNews) July 12, 2019
The letter also said that Victoria’s Secret “has failed to evolve with the times and, as a result, its brand is losing touch with its customers,” and that its advertising has not been “aligned with women’s evolving attitudes towards beauty, diversity and inclusion.”
There’s another potentially major problem facing the company. Leslie Wexner, the founder and CEO of L Brands, has close ties to Jeffrey Epstein, the financier indicted last week for sex trafficking. While Epstein’s client list is very opaque, Wexner is his one confirmed client and, per Law and Crime, Epstein purchased his large Manhattan home from Wexner.
In a New York magazine article about Epstein from 2002, the same one in which President Donald Trump is quoted calling Epstein “a terrific guy,” an Epstein associate says of Wexner, “it’s just not typical for someone of such enormous wealth to all of a sudden give his money to some guy most people have never heard of.” Wexner told CNN that he cut ties with Epstein “nearly 12 years ago.”